Do I Need a Trust If I Just Own a Home?
We’re going to talk about whether you need a trust if you own a home, right? So, you own one piece of property. Let’s just say, you own one home, and that’s where you live. And you have a modest account in the bank, and you have to ask yourself, do you need a trust?
These living trusts, you’ve heard about them. Is it necessary for you? If the house is here in California, the answer is absolutely. There are rarely any houses out here in California that are less than $150,000, and therefore, it will go through probate if it is not in a trust.
Now, a lot of people might ask, “Well, I’ll just put my kid’s name on the house, “and then they’ll inherit it. “And I don’t need a trust, right? “Why would I do that?” Well, by doing that, by putting them there, you are foregoing major tax benefits, huge tax benefits, something called the step-up in basis, and what it will do is it eliminates the capital gain almost entirely for your children if they wanted to sell this house, which you may have bought in the ’70s or ’80s and has a lot of capital gain.
Well, you are foregoing that huge benefit by putting their names on it today, so should you avoid that? Absolutely, and should you make a trust? Most likely.
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